The Two Economic Vehicles of TVET

When discussing Technical and Vocational Education and Training (TVET), most conversations focus on skills, qualifications, and employability. These are important, but I believe TVET can be understood through two complementary lenses: the Socio-Economic Vehicle (SEV) and the National Economic Vehicle (NEV).

The SEV perspective focuses on the individual. Through skills development, TVET helps people gain employment, improve their incomes, advance their careers, and pursue entrepreneurship opportunities. For many, TVET serves as a pathway to social mobility and economic security. Success is measured through employability, wages, career progression, and quality of life.

The NEV perspective focuses on the economy. Every nation requires a skilled workforce to support industrial growth, productivity, innovation, and competitiveness. In this sense, TVET contributes to supplying the technicians, technologists, operators, and skilled workers needed by industry.

However, an important distinction must be made. While TVET directly develops skills, it does not directly create jobs.

This leads to another distinction that is often overlooked: skills mismatch versus job mismatch. Skills mismatch occurs when workers lack the competencies required by employers. Job mismatch occurs when individuals possess relevant skills, but suitable employment opportunities are limited because industries are not expanding, investment is insufficient, or economic transformation is not creating enough demand.

Preparing people for work is only one part of the equation. The other is ensuring that the economy generates sufficient demand for their skills through industrial growth, investment, innovation, and enterprise development.

This is why workforce development and industrial development must be considered together. The question is not only:

What skills should we train?

but also:

What industries are we building, and where will these skills be applied?

Countries such as Germany, South Korea, and Singapore demonstrate that successful workforce systems are supported by strong industrial ecosystems. Skills development is aligned with industrial strategy, investment, innovation, and long-term economic planning.

This leads me to a simple conclusion:

TVET is fundamentally an SEV instrument because it develops people. However, it achieves its greatest impact when aligned with NEV objectives that create demand for those skills through industrial, investment, and economic development strategies.

In short, SEV develops the talent, while NEV creates the opportunities. When both are aligned, TVET becomes a powerful contributor to social mobility, industrial competitiveness, and national prosperity.

NISTI: Designing the Industry Component

Hello, let me introduce myself. I am Rahim Man, the Industry Manager of the fictional NISTI.

You may have heard about NISTI from my colleagues. Today, I would like to share the story from an industry perspective.

After all, if NISTI aims to strengthen industries, someone needs to represent the voice of industry.

Before I explain the Industry Component, let me briefly recap the NISTI concept.

ReCAP: NISTI CONCEPT 

As you may know, NISTI includes an in-house industry ecosystem as part of its overall design. Because of this, I am often asked what industries need most from Technical and Vocational Education and Training (TVET).

Many people assume the answer is simple: more skilled workers.

While skilled workers are certainly important, I believe the real question is different.

How do we develop stronger industries?

My reasoning is simple. A stronger Demand Side creates greater demand for talent, skills, innovation, and workforce development. When industries grow, the Supply Side grows with them.

This distinction may seem subtle, but it changes everything.

Traditional TVET institutions are designed primarily to educate students. Success is often measured through enrollment numbers, graduation rates, certifications awarded, and graduate employability. Industry participates through internships, advisory panels, and occasional curriculum reviews.

From an industry perspective, however, our challenges go beyond recruitment.

We need industries that can grow, innovate, digitalize, adopt new technologies, improve productivity, and compete globally. We need stronger capabilities, not just more workers.

This is where the NISTI concept—and what we here call the National Economic Vehicle (NEV) mindset—becomes different. 

Rather than operating as an education institution that serves industry, NISTI is a Government–Industry co-development platform (Co-investment). Its purpose is not simply to educate people, but to strengthen industrial capability through talent development, workforce transformation, innovation, and workforce intelligence.

Under the NISTI model, industry becomes more than a stakeholder. It becomes a customer, strategic partner, and co-owner of the ecosystem.

It exisits within the CAMPUS IN INDUSTRY MODEL or INDUSTRY IN CAMPUS VERSION.

 NISTI supports industry through four interconnected mechanisms.

The first is Talent Development, producing industry-ready technicians, technologists, specialists, and supervisors.

The second is Workforce Transformation, helping existing workers acquire new skills through upskilling, reskilling, and professional development.

The third is Innovation Capacity, providing access to applied research, prototyping facilities, testing environments, and collaborative projects.

The fourth is Workforce Intelligence, offering skills forecasting, workforce analytics, and talent pipeline planning.

Together, these mechanisms help industries build capability rather than simply fill vacancies.

However, none of this can be sustained unless NISTI is built on a viable operating model. If industry is expected to play a central role—particularly through the proposed in-house industry ecosystem—the institution must be supported by a business model that aligns the interests of industry, learners, and government.

A Different Business Model

What makes NISTI possible is a fundamentally different business model.

Traditional institutions depend largely on tuition fees and government funding. NISTI is supported through a partnership-based model (Government-Industry) that combines industry memberships, workforce subscription contracts, corporate training services, innovation projects, shared facilities, government grants, and strategic tax incentives. Student programmes remain important, but become one component within a broader industrial ecosystem.

From my perspective, the most important aspect of NISTI is that it recognises a reality often overlooked: government cannot develop industry alone, and industry cannot develop talent alone.

Both must work together.

Traditional TVET may asks:

"How do we develop people for industry?"

NISTI asks:

"How do we develop industry through the right people?"

In this sense, NISTI is not merely preparing people for the future of work.

It is helping build the future industries that will create that work."

TVET CHALLENGE: Skills Without Jobs, Jobs Without Skills

 

"The true measure of a TVET system is not how many graduates it produces, but how many graduates it prepares for available and meaningful work."

In an era of rapid technological advancement, education systems are under increasing pressure to prepare graduates with skills that match the needs of modern industries. As economies embrace artificial intelligence, automation, digitalization, and Industry 4.0 technologies, ensuring a strong connection between education and employment has become a critical priority. This is particularly true for Technical and Vocational Education and Training (TVET), which is designed to equip learners with practical skills for the workforce.

One way to evaluate the effectiveness of a TVET system is through TVET–industry alignment—the extent to which graduates secure employment related to their training and qualifications. Strong alignment suggests that training programs are responsive to labor-market needs, while weak alignment may indicate a gap between educational provision and employer demand.

Among the countries examined, Germany and Singapore demonstrate some of the highest levels of TVET–industry alignment, with an estimated 80–90% of graduates obtaining employment related to their training. Germany’s internationally recognized dual-training system combines classroom learning with extensive workplace experience, enabling students to develop industry-relevant competencies. Singapore has similarly established a responsive workforce development framework that continuously updates training programs in collaboration with industry stakeholders.

South Korea and Japan also exhibit relatively strong alignment levels, estimated at approximately 70–85%. South Korea has invested heavily in vocational education while maintaining close links with advanced industries. Japan benefits from strong employer engagement and workforce discipline, although demographic changes and technological transformation continue to create emerging skills gaps in certain sectors.

In contrast, the United Kingdom and Malaysia demonstrate more moderate alignment levels, estimated at 60–75%. While both countries have made significant efforts to strengthen vocational education, challenges remain in ensuring that graduate skills consistently match evolving industry requirements. Variations in regional economic development, sector-specific demand, and the pace of curriculum adaptation can contribute to employment mismatches among graduates.

The comparison highlights an important lesson: successful TVET systems depend not only on effective training but also on strong connections between education and industry. Apprenticeships, workplace learning, employer participation in curriculum development, and labor-market forecasting all contribute to better workforce outcomes.

However, workforce alignment is not solely a training challenge; it is also an industrial development challenge. Countries such as Germany and South Korea demonstrate that strong TVET outcomes are supported by vibrant industries capable of creating and absorbing skilled workers. Effective workforce planning therefore requires attention not only to skills development, but also to industrial transformation, investment, innovation, and job creation.

Ultimately, the success of a TVET system is measured not only by the skills graduates possess, but also by the availability of opportunities where those skills can be applied.

Effective TVET systems help reduce skills mismatch by aligning education and training with occupational needs. However, skills alignment alone does not guarantee employment. Graduates also depend on the availability of suitable jobs in a growing economy.

Workforce planning must therefore address both skills mismatch and job mismatch. The first concerns whether workers have the right skills; the second concerns whether enough appropriate jobs exist. Successful nations manage both.

Skills matter, but industries create the demand for those skills.

 

Sources: OECD Skills Outlook (2023), International Labour Organization (2021), Asian Development Bank (2015), World Bank (2019), and various studies on TVET systems in Germany, Singapore, South Korea, Japan, Malaysia, and the United Kingdom.

Disclaimer: The mismatch percentages discussed are approximate ranges derived from various studies and reports. Because different sources use different definitions and measurement methods, the figures should be interpreted as indicative estimates rather than directly comparable national statistics.

 

Samsung and The Unwritten Contract

 

Government: "We will help you grow."
Industry: "We will help South Korea grow."

South Korea's industrial transformation was supported by what might be called an Unwritten Contract between government and industry.

The government provided access to financing, infrastructure, workforce development, export support, and technology acquisition opportunities. In return, companies were expected to invest, export, create jobs, upgrade technology, improve productivity, and strengthen national industrial capability.

While many aspects of this relationship were supported by formal policies, laws, and programs, the broader understanding went beyond any single document. There was a shared expectation that firms receiving support would contribute to national development.

In simple terms, the message was:

If we help you grow, you must help South Korea grow.

Few companies illustrate this better than Samsung.

When Samsung was founded in 1938, it was not a technology company. It was a small trading business dealing in dried fish, vegetables, fruit, and other local products. Over time, it expanded into textiles, food processing, retail, and manufacturing. By the 1960s and 1970s, South Korea had identified electronics as one of its strategic industries and sought firms capable of entering the sector.

Samsung was given that opportunity.

However, Samsung was not selected because it was already an electronics company. In fact, it had little experience in electronics at the time. What distinguished Samsung was something else entirely.

South Korea was not screening for companies that already possessed advanced technological expertise. Rather, it was looking for firms that had demonstrated the ability to learn, invest, execute, and grow.

By the 1960s, Samsung had already expanded beyond trading into textiles, food processing, retail, insurance, and manufacturing. The company had demonstrated organizational discipline, managerial capability, operational competence, and a willingness to enter new industries. It had shown that it could take on increasingly complex challenges and deliver results.

In many ways, the government's question was not:

Who already knows electronics?

Instead, the question was:

Who has shown the ability to learn, invest, execute, and grow?

Samsung provided one of the strongest answers.

The company benefited from a supportive ecosystem that included access to financing, infrastructure, workforce development, and export-oriented policies. Yet support alone did not guarantee success. Samsung was expected to deliver results. It had to invest, expand, compete internationally, acquire technology, and continuously improve its capabilities.

Samsung embraced this challenge. Rather than remaining a trading company, it moved into manufacturing. Rather than remaining a manufacturer, it entered electronics. Rather than remaining an electronics assembler, it invested heavily in semiconductors, research, and innovation. Each stage represented a movement up the value chain.

The company benefited from a supportive ecosystem that included access to financing, infrastructure, workforce development, and export-oriented policies. Yet support alone did not guarantee success. Samsung was expected to deliver results. It had to invest, expand, compete internationally, acquire technology, and continuously improve its capabilities.

Samsung embraced this challenge. Rather than remaining a trading company, it moved into manufacturing. Rather than remaining a manufacturer, it entered electronics. Rather than remaining an electronics assembler, it invested heavily in semiconductors, research, and innovation. Each stage represented a movement up the value chain.

At the same time, Samsung helped fulfill the expectations of the Unwritten Contract. The company generated exports, created jobs, developed technological capabilities, strengthened supplier networks, and contributed significantly to South Korea's economic growth.

This relationship benefited both sides. Government support reduced some of the risks associated with industrial development, while corporate performance helped achieve national economic goals.

South Korea's government generally did not try to create national champions by giving firms permanent protection. Instead, it often combined support with pressure to perform, export, learn, and upgrade technologically.

The Unwritten Contract therefore was not merely about incentives. It was about alignment. Government and industry shared a common objective: building national capability.

Samsung's journey demonstrates what can happen when that alignment is sustained long enough. A small trading company can eventually become a global technology leader, and in doing so, help transform an entire nation.